How Should My Parents Budget for Medical Costs?
Summary: Medicare costs include premiums, deductibles, and coinsurance or copayments. A Medicare Supplement or Medicare Advantage plan can help you limit what you have to budget.
As your parents get older, they may begin to worry about their finances and how to manage medical costs as health concerns arise. Options in Medicare can help your parents find coverage that fits their needs and budget.
Be familiar with Medicare costs
Medicare costs include:
- Premiums: An amount you pay monthly to have coverage whether or not you use it
- Deductible: An amount you pay before your plan begins to pay
- Copayment: A set amount, say $15, which you pay every time you use a service, such as a primary care doctor visit
- Coinsurance: A percentage, such as 20% that you pay for medical services
Original Medicare does Not Cover All Medical Costs
Part A and Part B make up Original Medicare. Part A is hospital insurance that generally covers hospital stays, nursing care, and hospice. Part B covers other medical care like visits to your doctor and some medical equipment.
Medicare members have medical costs with Part A and Part B. Part A has a deductible for each benefit period. Patients pay that amount out of pocket before their coverage begins. There is also coinsurance, which goes up the longer you are in the hospital or a skilled nursing facility.
You may not have a monthly premium with Part A if you or your spouse worked for at least 10 years. If you worked less than 10 years, you might have a monthly premium as well. The amount of the premium depends on how many months you or your spouse worked.
Part B has a monthly premium. You will also pay an annual deductible before your coverage starts. At that time, you will pay coinsurance for services. The amount is usually 20 percent of the total medical cost approved by Medicare.
Medicare Supplement insurance plan helps cover Medicare cost of hospitalization
If your parent has many health concerns, a Medicare Supplement insurance plan might be a good choice. These plans pay medical costs not covered by Original Medicare. These costs might include annual deductibles, copayments and coinsurance. You will still pay your monthly premiums for Part B.
If you have a Medicare Supplement insurance plan, payments follow a certain order. Medicare pay the medical costs covered by Original Medicare first. Then, your Medicare Supplement plan will pay the share it covers.
Medicare-approved insurance companies offer Medicare supplement insurance plans. A different letter of the alphabet tells you the type of plan it is. All Plan A plans will offer the same basic standardized coverage. Monthly premiums for Plan A plans might be different from company to company.
Medicare Advantage Plan May Offer More coverage for medical costs
Parents that are healthy but want to see a dentist or optometrist every year might want a Medicare Advantage plan. These plans are an alternative way to get your Original Medicare benefits. Some plans also offer coverage for dental, vision and hearing services. Some also cover prescription medications.
Medicare-approved private insurance companies also offer Medicare Advantage plans. These plans may have monthly premiums. The amount of the premium can vary from plan to plan. Medicare Advantage plans also have out-of-pocket maximums. Once you reach your limit, your plan covers your medical costs for the rest of the year.
Medicare Prescription Drug Plans Lower Medication Cost
A parent that takes medications may want a Medicare Prescription Drug plan. Medicare Part D provides coverage to reduce your medical costs for medications. Medicare requires coverage for categories of medications that all plans must follow. If your medication is not covered by your plan, you may be able to take another covered drug in the same category.
Medicare Prescription Drug plans are available through Medicare-approved insurance companies. It adds drug coverage for members that have Original Medicare. It is not for people who have a Medicare Advantage plan with prescription drug coverage.
Helping Your Parent Make the Right Choice
When your parents choose the right Medicare option, it is easier to budget for medical costs. There are many different choices in Medicare coverage. To compare plans in your area now, enter your zip code below.